Understanding Corporations, Limited Liability Companies (LLCs) and Limited Partnerships
The best way to understand a corporation, limited liability company (or even a limited partnership) is to realize that each creates a special legal relationship or privilege between the business owner(s) and the government. These areas of government include:
1) State Government (including state taxing authorities and the state court system)
2) The Federal Government (specifically the IRS and the Bankruptcy court system)
You may be saying, alright Darius, I still dont understand what you mean by a relationship or privilege. The best way that I can put it is this:
A business entity is a legal relationship which allows for certain privileges. When teaching people about entities, I like refer to an often forgotten fact: In England during the colonial period the ability to create a corporation required an exclusive grant (i.e., permission) from the Crown (thats right the King or the Queen!). Remember a business entity is a privilege!
HERE IS ANOTHER TIDBIT: Did you know that WHEN the original 13 colonies were established, many were actually corporations or similar form. For example, the Maryland Company was used to settle and developyou guessed it, the State of Maryland. Other examples include, the Virginia company, the Massachusetts company and others. Why would someone use an entity to explore and colonize the New World? The reason is that colonization and exploration were risky investments. Ships were lost at sea, diseases ended the lives of thousands, and a host of other risks were present with each expedition.
By setting up these expeditions as corporations investors could contribute money but were only be liable for the amount invested. In other words, these early arrangements promoted exploration, development, and commerce by limiting liability for investors. The same reasoning is true today. When liability is limited to what you contribute to a business, people are more likely to start businesses. THE REASON: Less risk if everything goes wrong BUT more to GAIN when things go RIGHT!
The point of these historical facts is to make it clear that the purpose of a business entity is to limit the liability of owners/investors to the amount contributed to the business. These facts should also make you realize that liability protection is a privilege.
WHY SHOULD YOU BE CONCERNED ABOUT LIABILITY PROTECTION?
I am not here to scare youbut use common sense. Real estate businesses require you to deal with numerous parties, including: TENANTS, SELLERS, PARTNERS, INVESTORS, LENDERS, MANAGEMENT COMPANIES, INDEPENDENT CONTRACTS, EMPLOYEES, and others. The more parties you deal with the more likely it is that something may not go as planned.
The first step is to learn how to run your business in fair and careful mannerso that you reduce the chances of getting sued. Always remember this: A business entity (LLC, corporation or limited partnership) is not an excuse to act in a careless or negligent manner. You need to be fair when dealing with all parties and you need to outline agreements with partners, vendors, contractors, etc. You need to respond to tenants complaints regarding rental property. In short you need to become a MASTER good business practices. I spend a considerable about of time in my courses covering a topic I call LAWSUIT AVOIDANCE 101. This means that we teach you good business practices to help you reduce the risk of getting sued. ITS SIMPLY SO IMPORTANT!
Another issue to keep in mind is that since you will be dealing with TENANTS, SELLERS, PARTNERS, INVESTORS, LENDERS, MANAGEMENT COMPANIES, INDEPENDENT CONTRACTS, EMPLOYEES, COUNTY AGENTS, you may get into the position where you will need to assert your rights. In other words, you may need to take another person to court, because your rights have been violated, a contract has been broken, or money has not been paid to you. Many times when you assert your rights, you may then be sued by the party you are taking to court. I know this sounds harshbut it happens! This is called a cross claim and it means that the party who is being sued is now also suing. Usually this happens because the other partys attorney believes that they have a claim and/or they will be in a better position using a cross claim. Basically this means that for you TO ASSERT YOUR OWN RIGHTS, YOU MAY RISK GETTING SUED.
ALWAYS REMEMBER THIS: There are also steps you can take to allow more chances for a pre-lawsuit settlement. This makes the lawsuit truly a last resort. Ask this question: Do you have alternative dispute resolution clauses in your agreements? Obviously, if you can settle matters outside of court via an alternative dispute resolution method, then may be a big advantage and a savings of time and money. An alternative dispute resolution clause will require parties to work at settling a claim through mediation or another non-litigious (and less expensive) manner. Again, a lawsuit should be the absolute last resort. We cover all of these areas in more detail for investors because it something that most people and even some attorneys leave out!
There are also tax advantages and disadvantages to recognize when selecting an entity for your business. We will discuss these in later articles.
To learn more about which entity may be best for you and how to create, run, and maintain an iron clad LLC or corporation, you dont need a grant from the King or Queenbut you should see Mr. Barazandehs, Incorporate for Wealth and Wealth Building LLC courses at www.theinformedinvestor.com and www.attorneysecrets.com.
I want to wish you all the best in your business and email me if you ever need help: taxenterprises@yahoo.com
By: Darius M. Barazandeh, Attorney at Law / M.B.A. Tv Radio World
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1) State Government (including state taxing authorities and the state court system)
2) The Federal Government (specifically the IRS and the Bankruptcy court system)
You may be saying, alright Darius, I still dont understand what you mean by a relationship or privilege. The best way that I can put it is this:
A business entity is a legal relationship which allows for certain privileges. When teaching people about entities, I like refer to an often forgotten fact: In England during the colonial period the ability to create a corporation required an exclusive grant (i.e., permission) from the Crown (thats right the King or the Queen!). Remember a business entity is a privilege!
HERE IS ANOTHER TIDBIT: Did you know that WHEN the original 13 colonies were established, many were actually corporations or similar form. For example, the Maryland Company was used to settle and developyou guessed it, the State of Maryland. Other examples include, the Virginia company, the Massachusetts company and others. Why would someone use an entity to explore and colonize the New World? The reason is that colonization and exploration were risky investments. Ships were lost at sea, diseases ended the lives of thousands, and a host of other risks were present with each expedition.
By setting up these expeditions as corporations investors could contribute money but were only be liable for the amount invested. In other words, these early arrangements promoted exploration, development, and commerce by limiting liability for investors. The same reasoning is true today. When liability is limited to what you contribute to a business, people are more likely to start businesses. THE REASON: Less risk if everything goes wrong BUT more to GAIN when things go RIGHT!
The point of these historical facts is to make it clear that the purpose of a business entity is to limit the liability of owners/investors to the amount contributed to the business. These facts should also make you realize that liability protection is a privilege.
WHY SHOULD YOU BE CONCERNED ABOUT LIABILITY PROTECTION?
I am not here to scare youbut use common sense. Real estate businesses require you to deal with numerous parties, including: TENANTS, SELLERS, PARTNERS, INVESTORS, LENDERS, MANAGEMENT COMPANIES, INDEPENDENT CONTRACTS, EMPLOYEES, and others. The more parties you deal with the more likely it is that something may not go as planned.
The first step is to learn how to run your business in fair and careful mannerso that you reduce the chances of getting sued. Always remember this: A business entity (LLC, corporation or limited partnership) is not an excuse to act in a careless or negligent manner. You need to be fair when dealing with all parties and you need to outline agreements with partners, vendors, contractors, etc. You need to respond to tenants complaints regarding rental property. In short you need to become a MASTER good business practices. I spend a considerable about of time in my courses covering a topic I call LAWSUIT AVOIDANCE 101. This means that we teach you good business practices to help you reduce the risk of getting sued. ITS SIMPLY SO IMPORTANT!
Another issue to keep in mind is that since you will be dealing with TENANTS, SELLERS, PARTNERS, INVESTORS, LENDERS, MANAGEMENT COMPANIES, INDEPENDENT CONTRACTS, EMPLOYEES, COUNTY AGENTS, you may get into the position where you will need to assert your rights. In other words, you may need to take another person to court, because your rights have been violated, a contract has been broken, or money has not been paid to you. Many times when you assert your rights, you may then be sued by the party you are taking to court. I know this sounds harshbut it happens! This is called a cross claim and it means that the party who is being sued is now also suing. Usually this happens because the other partys attorney believes that they have a claim and/or they will be in a better position using a cross claim. Basically this means that for you TO ASSERT YOUR OWN RIGHTS, YOU MAY RISK GETTING SUED.
ALWAYS REMEMBER THIS: There are also steps you can take to allow more chances for a pre-lawsuit settlement. This makes the lawsuit truly a last resort. Ask this question: Do you have alternative dispute resolution clauses in your agreements? Obviously, if you can settle matters outside of court via an alternative dispute resolution method, then may be a big advantage and a savings of time and money. An alternative dispute resolution clause will require parties to work at settling a claim through mediation or another non-litigious (and less expensive) manner. Again, a lawsuit should be the absolute last resort. We cover all of these areas in more detail for investors because it something that most people and even some attorneys leave out!
There are also tax advantages and disadvantages to recognize when selecting an entity for your business. We will discuss these in later articles.
To learn more about which entity may be best for you and how to create, run, and maintain an iron clad LLC or corporation, you dont need a grant from the King or Queenbut you should see Mr. Barazandehs, Incorporate for Wealth and Wealth Building LLC courses at www.theinformedinvestor.com and www.attorneysecrets.com.
I want to wish you all the best in your business and email me if you ever need help: taxenterprises@yahoo.com
By: Darius M. Barazandeh, Attorney at Law / M.B.A. Tv Radio World
Vacation Home In Caribbean
50 Bird Bird Book Building House House Inspiration Instruction New
Grand Canyon Arizona Lodging
Chocolate Chip Cookie Murder
Keen Hiking Shoes
Defensive Driving Tips
Automotive Gps
Yung Buck
Discount Health Insurance Student
Kodak Camera History
Espanol Mtv Video
Southern Illinois Golf Course
Animal Anything Planet
Web Site Java
Massachusetts Soccer Store
Duel Kina Mtv
Discount Appliance Kitchen Aid
Stream Live Video
10 Britney Charlie Chocolate Factory
Acces Point
Body Builder Plan Workout
03 Cobra Mods
1 4 Mat Yoga
Picture Of Cartoon School Bus
Estate Listing Real State Washington
Child Cricket Magazine
Chianti Rental Tuscany Villa
Sunday World
Wild Bird Store
05 Football
Dallas Massage Bodywork
Card Code Deck Sports Upper
Directory Page Singapore Yellow
Winter Sports Event
Ct Day Haven North Spa
21st Insurance
Seven Sea Cod Liver Oil
Child Health Mental Psychology
Vegetarian
Clipart Drop Water
Free Real Estate Investing Advice
Monster Rain
Doctors Dating Service
Cruising Sea Of Cortez
1 Apartment Cat Finder
Engraved Crystal Award
Community Health Mental Worker
Blessing Dress For Infant
Carolina Location North Wedding
Home Exercise Weight Loss
Pictures Of The Designs And Constructions Of Sir Christopher
Health Care Professional Organization
Customer Relationship Management Canada
Oneal Dirt Bike Helmet
06 Costume Party
Financial Accounting Standard Board Fasb
Man Spa
Television
Sorel Maverick Boot
Australia Dating Internet
Sell Beanie Babies
Newspaper Obituary Dallas
Gear Goalie Hockey Street
City Dance Kansas Lesson Near
History Of Walt Disney World
Imagery Live Local Satellite
Falls Picture Water
Axim Site
6 Evolution Nocd Pro Soccer
Belize Mission Trip
Mobil Oil Product
1099 Independent Contractor Agreement
National Kitchen And Bath Association
Truth Calvin Klein Cologne
Icecream
John Deere Snow Blower Part
Beach Belek Resort
Red Coffee Maker
001 001 Cheap Flight Keyword Miva R Ticket
07 Gmc Truck
Custom Lifted 4x4 Truck
Bag Hockey Tower
Career
Jersey Shore Runner Club
Age Alone Can Home Kid Stay
Read3
Citizen National Bank Waxahachie
0800 Free Isp
100 Cotton Graphic T Shirt
Pensacola Florida Shopping
Brussels Airline Belgium
10 Bar Chocolate Pound
Vitamin B And Weight Loss
San Diego Catering
Hobby Toys
Tx Radiologist
Author Financial Freedom Nine Steps
Center Medical Nashville Vanderbilt
Chaise Lounge Fabric
Diamond Earring Gold Stud White
0 Car East Finance North Uk Used
Ac Dc T Shirt Vintage
Cheap Flight Greece International
Farmers Guest
007 Arcade Games
Acne Picture Popping Video Zit
The Office Comedy
Germany Heilbronn Vacation
Voz Sobre Ip
Cast Hero Show Tv
Professions Health
Child Educational Homemade Toy
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